Borsheim's Fine Jewelry
Company Overview
Borsheims Fine Jewelry is a high-end jewelry retailer operating primarily from a single large store in Omaha, Nebraska. Despite being Berkshire's most geographically concentrated major retail subsidiary, Borsheims consistently generates revenues that make it one of the highest-volume single-location jewelry retailers in the United States. Berkshire acquired Borsheims in 1989.
Investment Story
1989: Acquisition from the Friedman family. Berkshire purchased Borsheims from the Friedman family — who had built the business from a small pawnshop into one of America's most respected jewelry retailers — complementing its earlier acquisition of Nebraska Furniture Mart. Like NFM, Borsheims operated on the Mrs. B principle: sell at very low margins, move enormous volume.
The model: low margins, enormous volume. Borsheims prices jewelry at dramatically lower margins than comparable retailers, trusting that high volume at low margins generates more total profit than low volume at high margins. The approach requires genuine low cost operations and attracts customers from a wide geographic radius — Omaha residents, visitors, and ultimately the entire country through catalog and online sales.
Berkshire Hathaway annual meeting traffic. Borsheims hosts a special shopping event during Berkshire's annual shareholder weekend, where tens of thousands of visitors have the opportunity to purchase jewelry at the store. This event has become one of the most distinctive elements of the Berkshire annual meeting experience and generates substantial single-weekend revenue.
Buffett's Own Words
Borsheims, however, is not open on Sunday. Ask Mrs. B the secret of her astonishingly low carpet prices. She will confide to you - as she does to everyone - how she does it: “I can sell so cheap ‘cause I work for this dummy who doesn’t know anything about carpet.” Warren E. Buffett February 28, 1989 Chairman of the Board --- Warren E. Buffett, Chairman of the Board Berkshire Hathaway Inc.
When I call off the names of our managers - the Blumkin, Friedman and Heldman families, Chuck Huggins, Stan Lipsey, and Ralph Schey - I feel the same glow that Miller Huggins must have experienced when he announced the lineup of his 1927 New York Yankees. Let's take a look, business by business: o In its first year with Berkshire, Borsheim's met all expectations. Sales rose significantly and are now considerably better than twice what they were four years ago when the company moved to its present location.
Berkshire's business magicians - the Blumkins, the Friedman family, Mike Goldberg, the Heldmans, Chuck Huggins, Stan Lipsey and Ralph Schey. They deserve your applause. Sources of Reported Earnings The table below shows the major sources of Berkshire's reported earnings. In this presentation, amortization of Goodwill and other major purchase-price accounting adjustments are not charged against the specific businesses to which they apply, but are instead aggregated and shown separately. This procedure lets you
In a tough year for retailing, our standouts were See’s, Borsheims and Nebraska Furniture Mart. Two years ago Brad Kinstler was made CEO of See’s. We very seldom move managers from one industry to another at Berkshire. But we made an exception with Brad, who had previously run our uniform company, Fechheimer, and Cypress Insurance. The move could not have worked out better. In his two years, profits at See’s have increased more than 50%. At Borsheims, sales increased 15.1%, helped by a 27% gain during Shareho
In a tough year for retailing, our standouts were See’s, Borsheims and Nebraska Furniture Mart. Two years ago Brad Kinstler was made CEO of See’s. We very seldom move managers from one industry to another at Berkshire. But we made an exception with Brad, who had previously run our uniform company, Fechheimer, and Cypress Insurance. The move could not have worked out better. In his two years, profits at See’s have increased more than 50%. At Borsheims, sales increased 15.1%, helped by a 27% gain during Shareho
Investment Lessons
High-volume, low-margin retail requires fanatical cost discipline. Borsheims' model only generates adequate returns if overheads are minimized to allow competitive pricing while maintaining profitability. The Friedman family built a culture of cost-consciousness that allowed charging prices far below competitors while sustaining a profitable business. Maintaining this culture under Berkshire ownership was the primary integration challenge.
A single-location model can reach national scale with the right distribution. Catalog and online sales transformed Borsheims from a local Omaha institution into a national retailer. The Berkshire brand association provides credibility for remote purchases of high-value items where consumer trust is essential.